The Paychex Small Business Employment Watch for August, which reflects U.S. small businesses with fewer than 50 employees, reported hourly earnings growth for workers dropped to 2.89%. This marks the first time growth has been under three percent since January 2021. In addition, the one-month annualized hourly earnings growth dropped to 1.91%. The national small business jobs index has averaged 100.37 through eight months of 2024, representing modest employment growth.

“Our monthly jobs and wage reporting is based on actual payroll data and provides a near real-time pulse on the status of the small business labor market, which can be a leading indicator of the state of the overall U.S. workforce,” said John Gibson, Paychex president and CEO. “Our data has shown moderate changes in employment growth over the eight months in 2024, even though the jobs indexes in July and August were below 100. This supports broader trends of a cooling labor market and the Fed’s widely reported intention to begin lowering interest rates soon.”

“After holding steady for several months, hourly earnings growth continued to decelerate in August,” Gibson added. “Falling below three percent for the first time in three years is another notable signal that the labor market is moving closer to its pre-pandemic level.”

Jobs Index and Wage Data Highlights

• At 99.89 in August, the national jobs index increased 0.02 percentage points from July but remained slightly below 100, indicating nominal year-over-year job losses.
• National weekly hours worked growth (-0.08%) remained negative year-over-year for the 17th consecutive month, though one-month annualized growth was positive for the first time since January.
• The Midwest (100.50) remained the top region for small business employment growth for the third consecutive month. Leading the region and nation, Indiana (101.87) was the top state for small business employment growth again in August and is the only state with a positive 12-month change rate (0.26 percentage points).
• Education and Health Services (101.87) continued as the top industry sector for national job growth for the third consecutive month.
• Ranked first among regions for the 15th-straight month, the West (3.55%) was the only region to report hourly earnings growth above three percent in August.
• For the 10th consecutive month, Construction led growth among industries in hourly earnings (3.66%), weekly earnings (3.81%), and weekly hours worked (0.27%).

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